Wow! In a decided reversal of Monday’s and last week’s meltdown, the S&P 500 gained a stunning 4.98%. That was the biggest one-day gain in years, perhaps prompted by the realization that there wasn’t much of a reason for the recent selling.
Amazon (NASDAQ:AMZN) led the way with its 9.5% advance, partly because it’s a market darling that investors flock to when the tide is rising, and partly because the company said this year’s holiday related sales were once again record breaking. Roku (NASDAQ:ROKU) actually logged the bigger gain though, rallying 11.7% on Wednesday after Needham analyst Laura Martin called it her top stock pick for 2019.
Amazingly enough, not every name was swept up in yesterday’s bullish wave. Uxin (NASDAQ:UXIN) was off by a hefty 11.1%, unwinding most of Monday’s heroic gain. Traders are still trying to determine where the young Chinese e-commerce stock should be valued.
Although wildly bullish, yesterday’s huge rebound may also set the stage for profit-taking today. Tread lightly, and keep focused on stock charts of those like Verizon (NYSE:VZ), Kroger (NYSE:KR) and Citrix Systems (NASDAQ:CTXS) that are in better-defined paths than most other names.
Citrix Systems (CTXS)
With nothing more than a quick glance, Citrix Systems looks like it’s ready to recover from its recent drubbing … like thousands of other stocks. And, maybe that’s the case.
Or, maybe the stock is already too far gone to salvage even though Wednesday’s gain looks like it could be the beginning of a recovery.
- The concern here is the so-called “death cross,” where the purple 50-day moving average line has crossed below the 200-day average. There’s room to rally before CTXS stock can undo that bearish trigger.
- The weekly chart shows that previous death crosses don’t necessarily have to lead to lower lows. CTXS stock may not slip past the point of no return until it breaks below Wednesday’s low of $98.74.
- Unlike past bearish crosses of the 50-day and 200-day moving averages, this one has happened in the shadow of a bearish volume trend. The Chaikin line has been below zero since September, even before the stock ran into trouble.
Several weeks ago, and more than once, we pointed out Kroger shares had been trapped in a rising, widening trading range.
The lower boundary of that trading range failed to keep KR stock propped up thanks to last week’s meltdown. Worse, though it was up on Wednesday, Kroger shares are putting substantial pressure on the one and only remaining floor.
- The trading range in question is plotted with yellow dashed lines on both stock charts. The break below the lower edge of it is also equally clear.
- The new line in the sand is around $26.60, plotted with a red dashed line. That’s where Kroger shares have found support a couple of times since October, but that’s also near where they found a ceiling in May and June.
- If you look closely, you’ll see there’s still a gap from June that’s yet to be closed, or filled in. The lower end of the gap is at $26.39, though filling it in could kick-start a technical breakdown.
Finally, as was the case with Citrix Systems and a few thousand other stocks, VZ stock looks ready to rebound from a pullback. It looks more ready than most other names though, given how it has acted — and what it hasn’t done — so far this week.
- Early in Wednesday’s trading, VZ stock broke below a key technical support level around $52.90, marked with a red-dashed line. By the end of the session, however, it was back above that line. The failure to not remain below speaks volumes about investor intent.
- Just as telling is the way Verizon shares only had to kiss the white 200-day moving average line to get the rebound started.
- Although primed for a rebound, bear in mind there’s still a technical ceiling in play, plotted on the weekly chart. It’s currently around $62.00, and rising.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.